Today the Supreme Court issued one decision, described below, of interest to the business community.

CBOCS West, Inc. v. Humphries, No. 06-1431 (previously discussed in the September 25, 2007 Docket Report).

The Supreme Court today held that 42 U.S.C. § 1981—a Civil War-era statute commonly used in tandem with Title VII as the basis for race discrimination claims in the workplace—contains an implied cause of action for retaliation. Because the text of § 1981, which protects the rights of non-whites “to make and enforce contracts,” provides an implied basis for challenging employers’ decisions to terminate, demote, or otherwise discipline employees as a pretext for race-based retaliation, this decision affects virtually all employers, including small businesses not covered by Title VII. Although the Court’s decision does not substantially change preexisting law, it does solidify a right that had already been recognized by a “broad consensus” of the federal circuit courts (Slip op., at 7). Businesses nationwide will thus continue to be exposed to retaliation claims brought by employees claiming that they were improperly disciplined because they reported or complained about racial discrimination. Those claims are not subject to Title VII’s restrictions, including the obligation to seek administrative relief before filing suit or the cap on potential damages, and they have a much longer limitations period of four years.

Plaintiff Humphries, an African-American man, was an assistant manager at a Cracker Barrel restaurant. After Cracker Barrel terminated Humphries, he sued under 42 U.S.C. § 1981, alleging that the termination was in retaliation for having complained a week earlier that his direct supervisor unlawfully discriminated against him and another African-American assistant manager. The district court granted summary judgment to Cracker Barrel on Humphries’ retaliation claim, but the US Court of Appeals for the Seventh Circuit reversed and remanded the case for trial. The Supreme Court affirmed the Seventh Circuit’s decision, confirming—by a vote of seven to two—that § 1981 provides a cause of action for retaliation for reporting or seeking to protect others from race-based discrimination.

In reaching its decision, the Court noted that it had already recognized the right to sue for retaliation under 42 U.S.C. § 1982, which protects the rights of non-whites to own property. Jackson v. Birmingham Bd. of Educ., 544 U.S. 167 (2005) (interpreting Sullivan v. Little Hunting Park, Inc., 396 U.S. 229 (1969)). The Court then extended that rule to Humphries’ § 1981 suit, noting that it has historically interpreted § 1981 and
§ 1982 similarly—not only because of a close textual similarity, but also because they share a common origin and purpose. (Congress enacted both provisions as part of the Civil Rights Act of 1866, which was an effort to guarantee equal rights to newly freed slaves.) The Court also invoked the doctrine of stare decisis, referring to a “long line of related cases” in which it had interpreted the two statutes similarly. Slip op., at 8. The Court ultimately concluded that the notion that § 1981 contains a right to sue for retaliation is “well embedded in the law.” Id.

Justice Thomas filed a dissenting opinion, joined by Justice Scalia, in which he criticized the majority for “return[ing] this Court to the days in which it created remedies out of whole cloth to effectuate its vision of congressional purpose.” Slip op., at 17.